Merck
is making the case on Tuesday that it still has a role to play in the Covid-19 treatment landscape.
The FDA is convening an advisory committee to consider the company’s antiviral pill, molnupiravir. But the discussion will highlight the drug’s limitations, including safety risks and limited efficacy, which could cut expectations for the drug’s long-term sales even more.
Analysts widely expect the agency to authorize molnupiravir, though authorization probably would be limited.
Shares of Merck (ticker: MRK) have fallen even as shares of Covid-19 vaccine makers soared Friday and Monday against the backdrop of the emergence of a worrying new Covid variant, Omicron.
Merck’s stock fell 3.8% Friday, and was down another 5.8% Monday, while the S&P 500 rose 1.5%. Merck was the S&P 500’s worst performer Monday.
The drop came as hopes dim for molnupiravir. Shares jumped 8.4% on Oct. 1, when Merck announced that early data showed the drug had cut the risk of hospitalization or death by around 50%; Covid-19 vaccine stocks had fallen. Since then, the shine has come off the antiviral pill.
First,
Pfizer
(PFE) announced what appears to be more positive data on its Covid-19 antiviral, known as Paxlovid. Then, on Friday, Merck said updated results on its Phase 3 study of molnupiravir are far less promising than the initial data had shown. The study, according to the company, showed that molnupiravir cut the risk of hospitalization or death by 30%—not the initial result of around 50%.
Early Monday, Citigroup analyst Andrew Baum downgraded his rating of Merck to Neutral from Buy, in part citing new risks to sales estimates for molnupiravir.
“The clinical profile of Lagevrio continues to deteriorate,” Baum wrote, referring to molnupiravir by the name under which it is being marketed in the U.K., where it already has regulatory approval.
A Merck spokesperson said the company doesn’t comment on analyst reports or recommendations.
In early October, Barron’s reported on concerns raised by some scientists that molnupiravir could increase the risk of cancer or birth defects. Those concerns persist, though Merck maintains that its preclinical studies show that the drug is safe.
The worries stem from the way molnupiravir inhibits the replication of the virus that causes Covid-19: First by incorporating itself into the virus’s genetic code, and then causing errors as the virus replicates. The worry is that it could also cause mutations if it inserts itself into the genetic code of a human who takes the pill. This mechanism of action is specific to molnupiravir; Pfizer’s Covid-19 pill works differently.
The FDA, for its part, dismissed those worries in documents posted Friday in advance of Tuesday’s advisory committee meeting on molnupiravir, writing that the “risk of genotoxicity following treatment” with molnupiravir “is low.”
The scientists who initially raised the concerns remain unconvinced. In public comments submitted to the advisory committee, Dr. Ronald Swanstrom, a professor of biochemistry and biophysics at the University of North Carolina at Chapel Hill, whose laboratory published a paper this past spring arguing that molnupiravir could cause mutations in mammalian cell cultures, wrote: “Molnupiravir is about to be sent around the world carrying a big genotoxic question mark with it, one that most people who are given the drug will not have the background to fully understand.”
Merck scientists have taken issue with the Swanstrom lab’s study, though Swanstrom stands by his lab’s methods.
The key questions for the advisory committee will be how broad an authorization for molnupiravir should be. The FDA will ask the advisors to discuss whether the drug should be allowed to be used during pregnancy. It will also ask advisors about the risk that the use of molnupiravir could effectively create new strains of the virus.
In its own briefing document, the agency wrote: “It remains unclear if the potential for [molnupiravir]-associated changes in the SARSCoV-2 spike protein presents a public health risk, considering anticipated widespread use of MOV.”
Finally, the agency will ask the committee members if the benefits of molnupiravir generally outweigh its risks for adult patients at high risk of severe Covid-19, and which risk factors should qualify a patient.
Importantly, the FDA’s briefing documents were written on the basis of the initial data from Merck, not the updated results announced Friday that cut its efficacy. In an addendum to its briefing document noting the new data, the FDA noted that the benefit/risk assessments that will be presented on Tuesday may differ from those in the original briefing documents.
Analysts widely expect the drug to receive an emergency use authorization, though possibly for a narrow population.
“After reading the briefing documents, and considering the macro-pandemic situation, we expect molnupiravir authorization for all patients with one or greater risk factor …and regardless of vaccination / previous infection status,” SVB Leerink analyst Daina Graybosch wrote in a note out Monday.
Graybosch wrote, however, that the discussion will highlight ways in which molnpuiravir appears to be inferior to Pfizer’s Covid-19 pill. “This includes risk of harm to fetuses and accelerated viral mutation rate that may drive emergence of new SARS-CoV-2 variants, in addition to relatively weaker efficacy,” Graybosch wrote.
The FDA’s advisers are scheduled to convene at 9 a.m. and adjourn at 5 p.m.
Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com